Regeneron Shares Jump as Sanofi Increases Stake

By
Brett ChaseFeb 11, 2013 11:38 am

Sanofi tells its drug development partner that it plans to buy more of the biotech company's stock, but acknowledges an agreed purchase limit. The French drug maker is buying after a huge run-up in Regeneron's stock.

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Shares of Regeneron (NASDAQ:REGN) jumped Monday after the company said development partner Sanofi (NYSE:SNY) is buying a larger stake in the biotech drug maker.

Sanofi already owns about 17% of Regeneron's stock and is limited to owning no more than 30% of the shares under a 2007 agreement between the companies. Sanofi and Regeneron are partnered to develop multiple drugs, including a promising experimental cholesterol treatment. (See Regeneron, Sanofi Take Step Forward With Cholesterol Drug.)

The companies say Sanofi was required to disclose its plan to buy more shares on the open market under US antitrust law.

"We are very happy with the relationship with Regeneron, but needed this technical filing to get freedom to operate," Sanofi says in a statement to Minyanville. "Sanofi has the right to increase its shareholding in Regeneron. It may increase its holding over time subject to market conditions and within the terms of our partnership agreement."

As to whether this is the beginning of a hostile or friendly takeover: "Sanofi has not announced any intention to take a controlling stake in Regeneron. Sanofi is bound by its 2007 investor agreement, which caps Sanofi's potential investment at 30% of Regeneron's common stock."

The statement, of course, doesn't say Sanofi will never take over Regeneron. But the question is why Sanofi chose to buy the company's shares now?

Regeneron's stock is down a little in the past month but is still up 69% over the past year. The shares jumped 4% to $172.05 in morning trading Monday after earlier in the day jumping 9%. Paris-based Sanofi's US shares rose 3% to $48.03.

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